Peter Orszag: Cities should stop short of selling traffic data

In the midst of new revelations about federal government surveillance, cities are increasing their own monitoring programs by using traffic cameras to fight speeding. The result is that cities have ever more information about how and where we drive.

The issue is what cities should do with all that data. That question is anything but hypothetical: At the Clinton Global Initiative America gathering this month in Chicago, the central concern of the infrastructure task force was the desire for innovative revenue streams, possibly including traffic camera data, to pay for much-needed new projects. Google’s recently announced $1.1 billion acquisition of Waze, a traffic application, adds a new twist to the debate, by giving us a hint of just how valuable such data might be.

Camera use is spreading rapidly in the United States. By 2012, according to the Insurance Institute for Highway Safety, about two dozen states used traffic cameras, and about 700 municipalities had installed such systems or were in the process of doing so. The institute estimates that about a fifth of the U.S. population lives in areas where the cameras have been or are being installed.

I know from personal experience that these cameras work. I once received not one but two speeding tickets from different cameras on the way to my son’s soccer game. (I made it on time, but it was an expensive trip.) Next time, I’ll probably leave earlier.

More rigorous examinations confirm this anecdotal evidence. The insurance institute looked at the camera systems in Montgomery County, Md., which just happen to be the ones that caught me. It found that relative to sites in nearby Virginia, the share of drivers exceeding the posted speed limit by more than 10 miles per hour fell by 70 percent when cameras were installed and warning signs were posted in Maryland.

The reduction in speeding matters (and I shouldn’t have sped, regardless of whether I was caught) because the data show that excess speed is a factor in perhaps one-third of traffic fatalities. And despite what many people may think, only about 10 percent of speeding-related fatalities occur on interstate highways. About a quarter happen on streets with speed limits of 35 miles per hour or less. It’s even possible that the broader use of cameras has contributed meaningfully to the reduction in traffic fatalities over the past several years.

Cities also raise revenue from the speeding tickets that cameras trigger — at least until people learn not to speed, and the revenue source dries up, which would happen only in a scenario that would also substantially improve safety. In 2012, for example, the District of Columbia collected almost $100 million from its automated traffic enforcement project, more than twice the revenue in 2011, as the use of cameras expanded. Traffic cameras don’t generate significant revenue in every city that uses them, but they’ve generally raised at least some.

That brings us to the harder question. In an era of severe constraints on revenue but also legitimate concerns about privacy, should city governments turn any of the data they collect from those cameras into new revenue? After all, if Waze is worth $1 billion, presumably the data from all those cameras — on nonspeeders as well as speeders — is worth something, too.

Cities may start considering the many worthwhile infrastructure projects that could be built with traffic-camera funds. Given the overwhelming case for additional infrastructure investments today, all sorts of new revenue sources were discussed at the Clinton Global Initiative, including naming rights on airports and monetizing data.

But the privacy concerns for city governments selling those data to private companies seem to dominate any benefit from bolstering city revenue, even in a time of fiscal stress on cities and inadequate infrastructure investment.

Federal law generally protects the confidentiality of motor vehicle records, but it has loopholes. Some states, such as California, have gone further, providing strong protections for data collected by traffic cameras. Many other states haven’t addressed the issue, and a court in New York even suggested that those interested in the data might be able to purchase it.

Cities should go ahead and install as many cameras as they like; I hope they cut speeding and raise revenue from fines. Like it or not, those cameras will mean that cities have an increasing amount of data on how and where we drive, which will lead to a growing temptation to make money from it.

It’s important that cities fight that temptation: The data from those cameras should be strictly protected, as California law provides, even in the face of significant funding needs. Just because government can make money selling something doesn’t mean it should.

Peter Orszag is vice chairman of corporate and investment banking and chairman of the financial strategy and solutions group at Citigroup and a former director of the Office of Management and Budget in the Obama administration. He wrote this for Bloomberg News.